| By Chandraketu Tripathi | Updated April 2026 | ||||||||||||||||||||||||
| Pay-as-you-go (PAYG) or pay-per-mile car insurance charges you based on the actual miles you drive, rather than a flat annual premium. In 2026, two main models exist: by-the-day temporary cover (Cuvva, Tempcover) where you pay for exactly the days you drive; and annual pay-per-mile policies (By Miles, Insure The Box SmartMiles) where you pay a small base premium plus a pence-per-mile charge. PAYG insurance is most cost-effective for drivers who do under 5,000 miles per year — typically those who work from home, use public transport most days, or have a second car used occasionally. | ||||||||||||||||||||||||
Key Facts 2026 Pay-per-mile from: ~2-10p/mile plus base premium | Best for: under 5,000 miles/year drivers | By Miles: annual PAYG policy; monthly billing | SmartMiles: Insure The Box annual PAYG with telematics box | ||||||||||||||||||||||||
Types of Pay As You Go Car Insurance UK | ||||||||||||||||||||||||
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By Miles — Annual Pay-Per-Mile Car Insurance UK | ||||||||||||||||||||||||
| By Miles is the leading annual pay-per-mile car insurance provider in the UK. You pay a small annual base premium that covers the car while it is parked (typically £150-400 depending on the car and driver), plus a pence-per-mile charge for every mile you drive (typically 3-9p/mile depending on your driver profile). Billing is monthly and based on actual miles driven as tracked by the OBD (On-Board Diagnostics) port device fitted to your car. Example: a driver doing 3,000 miles per year at 5p/mile pays: base premium £200 + mileage charge £150 = £350 total. A standard annual policy for the same driver might cost £600-800 — making By Miles significantly cheaper at low mileage. | ||||||||||||||||||||||||
Pay-Per-Mile Car Insurance Cost UK 2026 — At Different Mileages | ||||||||||||||||||||||||
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Is Pay-Per-Mile Car Insurance Worth It UK? | ||||||||||||||||||||||||
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How Pay-Per-Mile Insurance Is Monitored UK | ||||||||||||||||||||||||
| Annual PAYG policies like By Miles and Insure The Box SmartMiles use a small device plugged into your car's OBD-II diagnostic port — usually under the steering column. The device records actual miles driven and transmits the data to the insurer. Installation takes 30 seconds and requires no engineer visit. Unlike black box telematics which monitors driving behaviour (speed, braking, cornering), pure PAYG policies typically only track mileage — not how you drive — which many drivers prefer. | ||||||||||||||||||||||||
Frequently Asked QuestionsWho is pay as you go car insurance best for UK? Pay-as-you-go car insurance is most cost-effective for drivers who drive fewer than 5,000 miles per year. This typically includes: home workers who rarely commute; drivers who mainly use public transport; retired drivers with occasional use; and second car owners. Above 6,000-7,000 miles per year, a standard annual policy is usually cheaper. How does By Miles car insurance work UK? By Miles charges a base annual premium (covering the car while parked) plus a pence-per-mile charge for every mile you drive. A small OBD device plugs into your car's diagnostic port to track actual miles. You are billed monthly based on real miles driven in the previous month. The base premium and per-mile rate vary by your driver profile (age, car, location, driving history). Is pay-per-mile insurance cheaper than standard car insurance UK? At low annual mileage (under 5,000 miles), pay-per-mile is typically significantly cheaper than a standard annual policy. At moderate mileage (5,000-7,000), it is worth comparing both. Above 7,000-8,000 miles per year, a standard annual policy is almost always cheaper. Always get quotes from both types before committing. Does pay-per-mile car insurance affect your no-claims bonus UK? Yes — annual pay-per-mile policies (like By Miles) work like standard annual car insurance for no-claims bonus purposes. If you make a claim, it affects your NCB in the same way as any other annual policy. By-the-day temporary policies (Cuvva, Tempcover) are standalone policies that do not affect your regular annual policy's NCB. | ||||||||||||||||||||||||
| Related Guides | ||||||||||||||||||||||||
| Sources: By Miles, Insure The Box SmartMiles, Cuvva, Which?, ABI, Compare the Market. Always compare. April 2026. |
Pay As You Go Car Insurance UK 2026: By the Mile Insurance Explained
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